With many year-end companies working on initial drafts of their 2020 proxy statements, we thought it might be worth sending a quick reminder of two recent rule changes – briefly summarized below – that will (modestly) impact this year’s proxy statement.

• Compliance with Section 16(a) of the Exchange Act: Item 405 of Regulation S-K previously required companies to disclose information about late Section 16 filings under the caption “Section 16(a) Beneficial Ownership Reporting Compliance.” As part of the recent FAST Act amendments, the disclosure header is now “Delinquent Section 16(a) Reports” and companies are encouraged to exclude this heading altogether when they have no Section 16(a) delinquencies to report. Since this is one item that is typically specifically incorporated by reference into Part III of Form 10-K, to the extent the heading is retained, companies should also update the header cross-reference in the Form 10-K.
• Hedging Policy: Most companies already disclose their hedging policies in their proxy statement due to Item 402 of Regulation S-K, which requires companies to describe any hedging policies in the Compensation Discussion & Analysis (CD&A) to the extent material and applicable to the named executive officers. According to the SEC’s new hedging policy disclosure requirements (included in Item 407 of Regulation S-K), companies are now required to disclose expanded information about their hedging policies, including the specific categories of persons covered and the specific categories of hedging transactions that are expressly permitted or disallowed (companies may alternatively disclose their policies in full). In light of these expanded disclosure requirements, hedging policy disclosures may need to be updated for this year’s proxy statement.

We have seen companies take various approaches in terms of where the expanded hedging policy disclosure appears in their proxy statement. While most are continuing to include in their CD&A, others are moving outside of the CD&A and either cross-referencing that disclosure in the CD&A or including a more condensed summary in the CD&A.